Loans

A grace period is a period when you pay only interest, without repaying the principal amount of the debt.

Credit history is information about the borrower, which is stored in the credit bureau and contains information about the fulfillment of obligations assumed under loan agreements concluded with banks and other credit organizations.

There are two payment methods for monthly payments:

1. annuity - the division of the entire amount of the debt (the principal amount of the loan, interest and other payments on it) into equal parts and equal payment throughout the entire period;
2. differentiated payments - here the payment amount is gradually reduced, since interest is calculated in relation to the amount of the loan balance.

Loan refinancing is the repayment of the original loan by concluding a new loan agreement, usually on more attractive terms (interest rate, loan term). In simple terms, this is a loan that is taken to pay off an old loan.

The borrower may provide the bank with one or more of the following types of collateral:

• pledge of property or securities;
• bank or insurance organization guarantee;
• third party guarantee;
• insurance policy to insure the risk of non-repayment of the loan by the borrower.

When repaying a loan, the borrower returns:

• initial loan amount;
• percent for the use of funds;
• other expenses.

Interest rates on loans are calculated according to general principles - as a share (in%) of the principal amount, calculated for a certain period, usually a year. The loan term can be significantly more or less than a calendar year, but this does not change the essence of the accrual, the interest rate is recalculated based on the period.

Other loan costs may include, for example, bank commission, appraisal, insurance and collateral, as well as penalties for late repayment of monthly payments, etc.